A spate of coal-fired power station failures and soaring fossil fuel costs pushed Australia’s east-coast electricity prices to their highest levels on record during the weeks leading up to last month’s extraordinary suspension of the national power market.
In a new report to be released on Friday, data from the Australian Energy Market Operator (AEMO) reveals the average wholesale electricity price for the June quarter reached an unprecedented $264 per megawatt-hour – more than triple the previous quarter’s average of $85.
Soaring fossil fuel prices, coal plant breakdowns and higher gas-fired generation drove record east coast power prices in the June quarter.Credit:Joe Armao
The spike was driven by “multiple factors”, AEMO said, including a record level of coal-fired power on the eastern seaboard being out of service for that time of the year, forcing expensive gas-fired electricity to fill the gap. Output from gas generators was 27 per cent higher compared with the same time last year, the report added, while prices of the fuel were soaring amid global shortages and intensifying competition.
Violette Mouchaileh, AEMO reform delivery manager, described the June quarter as one of the “most complex and challenging periods in the 20-year history of the national electricity market” and underscored the need to accelerate the power grid’s transition to cleaner sources of energy.
“What’s clear is the urgent need to build-out renewable energy with diversified firming generation – like batteries, hydro and gas – and transmission investment to provide homes and businesses with low-cost, reliable energy,” she said.
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The east-coast electricity system was thrown into chaos on the week beginning June 13, forcing AEMO to seize control of the market for the first time in its history to stabilise power supplies and avert intensifying threats of blackouts in multiple states.
Many power generators said they could not remain viable under restricted price caps that AEMO had imposed to halt surging wholesale electricity prices, prompting them to withdraw offers to supply the grid.
The withdrawal exacerbated market conditions that were already tight because of a series of unexpected breakdowns at ageing coal-fired power stations across the grid.